【NON-p】econ219--THE RISE OF CANADA’S..r

That year only 9000 households were surveyed compared

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Unformatted text preview: been u ndertaken since 2005. That year, only 9,000 households were surveyed, compared to 23,000 in the previous survey, undertaken in 1999, so the sample became too small to provide a reliable estimate of trends for t he top 1%. The top 10% of households saw its share of wealth rise from 51.8% in 1984, to 55.7% in 1999 to a n estimated 58.2% in 2005, based on a study by René Morissette and Xuelin Zhang: Revisiting Wealth Inequality, published in Statistics Canada’s periodical Perspectives, Volume 7, No. 12, December 2006. Prior to 1984, the survey had been conducted on a more regular basis — 1955, 1959, 1964, 1970, and 1977. There a re currently no plans to conduct this survey again in Canada. The United States has been conducting the Survey of Consumer Finances — its survey of wealth, or net worth — through the Federal Reserve Board every three years since 1983, the latest being done in 2007. 14 “Wealth” refers to net worth — assets minus liabilities. In 2005 total assets of Canadian households stood at $5.6 trillion, while total household debt stood at $760 billion. The Survey of Financial Security is Statistics Canada’s occasional survey which assesses the distribution of assets and liabilities — net worth, or wealth - by income, age, education, immigrant status and other attributes. the rise of canada’s richest 1 % 19 rest of the nation to divvy up the remaining 40%. On average, those in the bottom 20% were standing in a $7,800 debt hole in 2005.15 That year, 14 per cent of Canadian households owed more than they owned, including equity in their homes. Twenty-four per cent had no financial assets at all. A recently updated annual report by the financial research institute Investor Economics identified 544,000 “high-net-worth” households in Canada as of December 31, 2009, which they said represented 3.8% of all households.16 The report calculated that this group controlled $1.78 trillion dollars of financial wealth, 67% of the total financial wealth of Canadian households.17 Despite the global economic meltdown, the wealth of the nation has grown. As of the first quarter of 2010, National Accounts data shows that Canadian households had accumulated $5.9 trillion in net worth (assets minus liabilities). The largest component of this aggregate wealth is equity in one’s home. There are about 15.4 million households. Average wealth of Canadian households has grown to $383,100, primarily because of rising real estate prices. It is possible that median wealth (the half way mark in the distribution) has declined since the recession, as middle class families have taken on more debt, and it is probable that more households are in net debt positions at the bottom of the distribution. That’s because most Canadians entered the Great Recession of 2008-09 more exposed to the risks of economic downturns than at any time since the Second World War.18 Jobless benefits are at levels last seen in the early-1940s. Savings rates haven’t been this low since the late-1930s. Household debt has never been higher, rising from an average of $1.40 owed on every dollar of disposable income at the outset of the recession in 2008 to $1.49 by early 2010. Most Canadians are inching their way through recovery, trying to hang onto what they’ve got. But for some Canadians, things have never been so good. 15 René Morissette and Xuelin Zhang, Revisiting Wealth Inequality, Perspectives on Labour and Income, Statistics Canada Catalogue 75-001-xie, Vol 7. No.12, December 2006. This article tracks the distribution of net worth in 1984, 1999 and 2005. Pension assets were not included in earlier surveys, therefore the 2005 value does not include pension assets. In 2005 29% of Canadians had no pension assets. 16 Marlene Habib, For the Wealthy It Takes a Village , The Globe and Mail, October 6, 2010 17 Investor Economics’ annual Household Balance Sheet data updates come from a variety of administrative and survey sources, and do not line up with Statistics Canada’s definition of financial assets on the Balance Sheet tables from the National Accounts. Their definition of total financial wealth assets totaled $2.7 trillion at the end of 2009. Statistics Canada shows total financial assets in the household sector were $2.037 trillion by fourth quarter 2009. (Table 3, Catalogue 13-022-x) 18 A rmine Yalnizyan, E xposed: Revealing Truths About C...
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This note was uploaded on 09/17/2012 for the course ECON 219 taught by Professor Ragan during the Fall '08 term at McGill.

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